Comments on: Infomediaries–Where Are They? https://blog.ericgoldman.org/archives/2005/03/infomediarieswh.htm Wed, 18 Jul 2018 21:30:00 +0000 hourly 1 By: Eric Goldman https://blog.ericgoldman.org/archives/2005/03/infomediarieswh.htm#comment-2145 Wed, 18 Jul 2018 21:30:00 +0000 http://blog.ericgoldman.org/archives/2005/03/infomediarieswh.htm#comment-2145 In reply to apoikola.

I turned blog comments off for about a decade…

]]> By: apoikola https://blog.ericgoldman.org/archives/2005/03/infomediarieswh.htm#comment-2144 Wed, 18 Jul 2018 21:22:00 +0000 http://blog.ericgoldman.org/archives/2005/03/infomediarieswh.htm#comment-2144 13 years later I can say the same… I have been thinking a lot about “infomediaries” and where are they?

Now we have some newer candidates like:

https://cozy.io/en

https://meeco.me

http://digi.me

https://hubofallthings.com

https://consentric.io

https://www.fairandsmart.com/en

GDPR in Europe is pushing for the change, blockchain based self sovereign identity technologies are coming reality. Is there something fundamentally stopping the infomediaries to arise?

Why nobody has commented in this blog-post in 13 years?

]]> By: Mark Schultz https://blog.ericgoldman.org/archives/2005/03/infomediarieswh.htm#comment-4 Mon, 11 Apr 2005 10:53:43 +0000 http://blog.ericgoldman.org/archives/2005/03/infomediarieswh.htm#comment-4 Eric, your post reminds me of the problems faced by the B2B hubs in the late ’90s. Although they were not completely analogous to infomediaries, one of the roles that they wanted to play was similar: interposing themselves between buyers and sellers, thus increasing costs, but creating more opportunities for exchange and reducing transaction costs. Some of the problems were: (1) They never worked. The technology remained vaporware, enriching only consultants. It was harder to make these things work than everybody thought. (2) Collective action problems / lack of network effects. They only were worth the trouble if a lot of players (both buyers and sellers) joined up. Everyone waited for everyone else to commit. (3) Distrust on the part of the sellers. Sure, it would be nice for buyers to set up a scenario where suppliers come in and bid against each other. But why should the sellers do it? Access to a lot of customers would motivate a seller, but the motivation for sellers to wait for customers to materialize exacerbates problem #2.

Fourth, and most important, the costs failed to outweigh the benefits. Like so many others in the late ’90s, B2B hub and infomediary enthusiasts underestimated transaction and transition costs and overestimated benefits. The costs of B2B hubs and infomediaries include: (a) Extra step in transaction; (b) Learning how to use a new service; (c) Paying for the service (even free registration for an infomediary required filling out a lengthy form and, most likely, being bothered with e-mail); (d) Loss of control (not just a trust issue involving privacy, but a trust issue issue regarding competence/effectiveness–are you getting a better deal than you would find on your own?). There likely are other costs that I am missing. Every new cost added weighs heavily on a business model that relies on reducing transaction costs and exploiting network effects. These costs make it harder to convince people to come on board (“will I *really* come out ahead?”), which in turn keeps the business from getting off the ground (no network effects). Also, costs to your customers reduce savings, thus reducing what they are willing to pay for the service. B2B hubs faced this problem: They had a hard time convincing people of the value of paying even infinitesimal transaction fees.

The business can solve some of the cost and network effects problems by giving away its services at first. Such a strategy takes time and money and increases risk. Venture capitalists have learned the hard way (and perhaps “overlearned”) to be skeptical of such a model. Moreover, as I noted in point (1), these things generally proved more costly and harder to create than anyone thought. The technology was not “there” yet.

Still, I was also “drinking the kool aid” (as we liked to say back then). My clients had some compelling pitches. The economics seemed to work. We were too optimistic. If the infomediary model made senses all, however, somebody may pick it up at a later time. Perhaps the technology will be more favorable. Perhaps the players will be ready now if they were not earlier. Perhaps the model will work better if an established business incorporates it into a wider business model (one thinks of how eBay and Amazon have gradually incorporated complementary business models).

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